The microcontroller and touch technology solutions leader acquired
Newport Media, a maker of low-power Wi-Fi and bluetooth gear, for
$140 million. The deal, announced in early July, is likely to be
accretive to Atmel's non-GAAP financials in the second half of
2015. (For details, read:
Atmel to Boost Internet of Things Market with
Newport Media Buy
)

With the transaction expected to be dilutive for a year or more, it
seems that Atmel believes the opportunities for IoT-based revenues
to be fairly long-term in nature.

The IoT Market

Atmel is aiming to capitalize on the anticipated growth in the
semiconductors market, driven by growing demand for internet
connectivity in everyday items. Integration of Newport Media's
solutions will enable Atmel to create the industry's most
comprehensive wireless portfolio of smart connected devices to
cater to the wide spectrum of the IoT market.

The IoT concept foresees billions of connected devices and systems
with applications ranging from sensors and mobile devices to home
appliances and cars. According to Cisco Systems, about 50 billion
devices would be connected by 2020, most via WiFi.

Consolidation in the Semiconductor Space

Atmel's buyout of Newport Media was part of an industry-wide
acquisition spree. Per data compiled by Bloomberg, transactions
worth $11 billion were announced in the first half of 2014 in the
North American semiconductor industry - the highest since 2011.

Additionally, investors have reacted positively to recent
acquisitions in the semiconductor space, as indicated by the share
price returns of the concerned parties. Shares of RF Micro Devices
Inc. (
RFMD
) appreciated 21% on Feb 24, following the announcement of its
merger with TriQuint Semiconductor Inc. (
TQNT
), while the latter gained 26%. Similarly, Analog Devices, Inc. (
ADI
), a maker of semiconductors for wireless-phone systems, rallied 5%
on Jun 9, after announcing its decision to buy Hittite Microwave
Corp.

Looking Ahead

In the maturing semiconductor industry, it seems that acquisitions
are becoming the favored path to achieve growth and expansion. With
the Newport Media acquisition, Atmel is conforming to the industry
trends as it seeks to expand its capabilities in the wireless
connectivity segment.